Why this is important to Wisconsin businesses: Foreign SMEs can now apply for state aid and benefits on equal terms with Russian businesses
With the introduction of sanctions against Russia, trade and economic relations with the U.S. have been on the decline: By the end of 2015, commodity turnover between Russia and the U.S. had decreased by 27.9 percent to $21 billion.
Despite the general stagnation in relations, there are individual examples of new successful projects. For example, Emerson has invested $40 million in a structure that develops and produces measuring instruments and automation systems, while Trammo Group has invested $10 million in a joint enterprise that produces granular sulfate ammonia.
Among other significant American projects are Armstrong's production of ceiling panels made of mineral fiber (a $60 million investment) and the contracts to assemble Bell helicopters at the Urals Civil Aviation Plant.
However, while large companies are capable of solving their problems by themselves, small and midsize enterprises (SMEs) can seldom overcome political barriers. In order to facilitate the penetration of the Russian market by this segment, Moscow has taken some targeted steps.
For example, since 2015, foreign entrepreneurs have been able to establish small and midsize businesses in Russia (with annual revenues of up to $11.8 million), and apply on equal terms with Russian businesses for state aid and benefits. The foreign share in a company can now be up to 49 percent, up from a limit of 25 percent.
Another important instrument for creating favorable conditions for these businesses is the so-called "special-invest-contract" introduced this year, a new type of contract for foreign investors who wish to open localized production in Russia.
Each contract is stipulated individually: The higher the level of localization, the more benefits the investor will receive. The first "special-invest-contract" is expected to be signed with Claas, the German agricultural technology producer, which has been operating in Russia for more than 10 years.
The American Chamber of Commerce has said that given these conditions, U.S. companies would be particularly interested in the Russian agricultural sector.